Bitcoin (BTC) has been struggling to sustain levels above 85,000,despitea1.985,000,despitea1.990,000 mark for over a week, traders are questioning whether the bull market has stalled and how long selling pressure will persist. However, a closer look at Bitcoin’s derivatives metrics reveals a more optimistic outlook, suggesting that BTC could soon rebound to $90,000.
Bitcoin Basis Rate Rebounds: A Sign of Strength
From a derivatives perspective, Bitcoin has shown remarkable resilience despite a 30% drop from its all-time high of $109,354 on January 20. One key metric, the Bitcoin basis rate, has rebounded to healthier levels after briefly dipping into bearish territory on March 13.
The basis rate measures the premium of monthly futures contracts over spot prices. Traders typically demand a 5% to 10% annualized premium to compensate for longer settlement periods. When the basis rate falls below this range, it signals weak demand from leveraged buyers. Currently, the rate stands at 5%, slightly lower than the 8% recorded two weeks ago but still within neutral territory.
This recovery in the basis rate indicates that professional traders remain cautiously optimistic about Bitcoin’s prospects, even as broader market conditions remain uncertain.
The Role of the S&P 500 and Central Bank Policies
Bitcoin’s price action has been closely tied to the S&P 500, reflecting its growing correlation with traditional markets. The stock market has faced significant pressure due to fears of an economic recession, prompting investors to reduce exposure to risk-on assets like Bitcoin and shift toward safer investments such as short-term bonds.
However, central banks are expected to implement stimulus measures to avert a recession. Historically, such measures have benefited scarce assets like Bitcoin, which often outperform in environments of monetary easing. According to the CME FedWatch Tool, markets are pricing in less than a 40% chance of U.S. interest rates falling below 3.75% from the current 4.25% baseline ahead of the July 30 FOMC meeting.
If the S&P 500 recovers some of its recent 10% losses, Bitcoin could regain momentum and reclaim the $90,000 level. However, in a worst-case scenario where panic selling of risk-on assets continues, BTC may underperform in the short term, especially if spot Bitcoin ETFs experience sustained net outflows.
Derivatives and Margin Markets Show No Signs of Stress
Despite recent market volatility, Bitcoin derivatives and margin markets remain stable, offering further evidence of resilience. The 25% delta skew metric, which measures the demand for put (sell) options relative to call (buy) options, has stayed within neutral territory. This suggests that professional traders are not actively hedging against a significant price drop, indicating confidence in Bitcoin’s stability.
Similarly, the Bitcoin long-to-short margin ratio at OKX shows longs outweighing shorts by 18 times. While excessive confidence has historically pushed this ratio above 40 times, the current level mirrors sentiment from January 30, when Bitcoin traded above $100,000. This balanced ratio reflects a healthy derivatives market, with no signs of stress or bearishness.
Why Bitcoin Could Reclaim $90,000
Several factors support the case for Bitcoin’s recovery to $90,000:
- Resilient Derivatives Metrics: The rebound in the Bitcoin basis rate and stable delta skew indicate strong underlying demand.
- Central Bank Stimulus: Expected monetary easing could boost scarce assets like Bitcoin.
- Correlation with S&P 500: A recovery in the stock market could lift Bitcoin’s price.
- Investor Sentiment: The absence of panic in derivatives and margin markets suggests confidence among traders.
While short-term challenges remain, the combination of these factors creates a favorable environment for Bitcoin to regain its footing.
Conclusion: A Bullish Outlook for Bitcoin
Bitcoin’s recent price action may have left some traders questioning the sustainability of the bull market, but derivatives metrics tell a different story. With the basis rate rebounding, delta skew remaining neutral, and margin markets showing no signs of stress, Bitcoin appears well-positioned to reclaim $90,000 in the coming weeks.
As central banks potentially implement stimulus measures and the S&P 500 stabilizes, Bitcoin could once again emerge as a standout performer in the financial markets. For investors, this presents an opportunity to capitalize on BTC’s resilience and long-term potential.
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